Manhattan’s inventory of homes for sale plunged to a seven-year low in the third quarter as owners refrained from listing their properties in a market with flat prices, limiting a rebound in deals as buyer demand picks up.
The number of apartments on the market totaled 5,847 at the end of the quarter, a 24 percent decline from a year earlier and the lowest since the first three months of 2005, according to a report today by appraiser Miller Samuel Inc. and brokerage Prudential Douglas Elliman Real Estate. Sales fell 5 percent to 2,952, while still reaching the second-highest level since 2008.
Buyers are returning to the market as apartment rents surge and mortgage rates fall to record lows, only to find a dwindling supply of homes for sale, said Jonathan Miller, president of Miller Samuel. The absorption rate, or amount of time it would take to sell all the listed properties at the current pace of sales, was 5.9 months, the fastest since 2007.
“The inventory shortage is becoming chronic,” Miller said. “You can’t have inventory continue to drop indefinitely without seeing some sort of upward price pressure.”
The median price of all condominiums and co-ops that changed hands in the quarter fell 2.3 percent from a year earlier to $890,000, according to Miller Samuel and Prudential.
Sellers aren’t in a rush to tap into rebounding demand because the Federal Reserve has signaled it will keep borrowing costs low through 2015, according to Miller. Owners who bought during Manhattan’s market peak and saw their values fall may not have built up enough equity to sell and buy something bigger, he said. They also see no reason to enter a rental market where lease rates are poised to surpass their 2006 record, he said.
“People are just enjoying their apartments,” Miller said. “There’s no advantage for many to rent and they’re not able to trade up so they’re waiting because there’s no urgency.”
The trend is playing out across the U.S. as prices nationally start to increase. About 2.47 million previously owned homes were for sale in August, an 18 percent drop from a year earlier and close to the lowest level since 2005, according to the National Association of Realtors.
The average rate for a 30-year fixed loan fell to a record low of 3.4 percent last week, the lowest in data going back to 1971, according to Freddie Mac. The average 15-year rate dropped to 2.73 percent, also a record, as the Federal Reserve resumed purchases of mortgage-backed securities.
The low rates mean Manhattan owners might be inclined to refinance instead of sell, while waiting for market values to improve, said Sofia Song, vice president of research for property listings website StreetEasy.com, which also released a report on the Manhattan market today.
“If they’re serious sellers, there’s some reason behind it,” said Hall Willkie, president of brokerage Brown Harris Stevens, which also released a report today.
Hans De Groot, an attorney who heads the international tax department of Viacom Inc., decided to sell his three-bedroom condominium in the Clinton neighborhood because he was trading up to another property in the area -- and he was able to complete both deals within six months.
De Groot and his wife, seeking outdoor space, started their search in February and by August had closed on a three-bedroom townhouse with a private parking garage at the Dillon, a new development on West 53rd Street between Ninth and Tenth avenues. The property, for which he paid $3.73 million, includes a private back yard, with room for a dining table and an outdoor sofas amid the backdrop of an ivy-covered brick wall.
“People who have visited me have said this is fantastic, but it’s very European,” said De Groot, 63, who moved to New York from the Netherlands.
De Groot listed his old apartment on 58th Street for $2.95 million in May and found a buyer by August, after lowering the asking price to $2.895 million, according to StreetEasy. He paid $2.49 million for it in 2006.
“I have the feeling that prices are not falling,” De Groot said. “On the contrary, I have the feeling that they are moving up, just not at the speed that they were in 2006.”
Other reports issued today on the Manhattan apartment market showed dwindling inventory and and an appetite among buyers to acquire what’s available. Corcoran Group said inventory was at its lowest point in more than seven years, with 7,041 available listings. Sales reached a four-year high of 3,821 closed deals, while the median price was little changed from a year earlier at $850,000.
StreetEasy said purchases of condos and co-ops totaled 3,942, a 17 percent increase from a year earlier, while the median closing price climbed 1.2 percent to $850,000. The figure is an estimate that includes transfers recorded with the the New York City Department of Finance by Sept. 30, as well as transactions that were completed in September and are expected to be recorded later.
The number of units listed for sale shrunk 12 percent from last year to 12,599, StreetEasy said.
Brown Harris Stevens and its sister brokerage, Halstead Property LLC, reported a 12 percent increase in the number of sales to 2,790, the highest quarterly total since the aftermath of Lehman Brothers Holdings Inc.’s bankruptcy four years ago.
Purchases of luxury apartments, defined as the top 10 percent of all sales by price, totaled 295 deals, a 5.1 percent decline from a year earlier, Miller Samuel and Prudential said. The median price of those transactions fell 2.6 percent to $4.07 million.
On the Upper East Side, the median price of previously owned co-ops fell 1 percent from a year earlier to $840,000, according to Corcoran. Condo prices in the neighborhood fell 6 percent to a median $1.03 million.
On the Upper West Side, the median price of co-op resales was little changed at $795,000, while condo resale prices dropped 1 percent to $1.13 million.